CP and KCS merger proposal receives Mexican regulatory approvals

Credit: Canadian Pacific

Canadian Pacific Railway Limited (CP) and Kansas City Southern (KCS) have announced that they have received the required regulatory pre-transaction control approvals from the Mexican Federal Economic Competition Commission (COFECE) and the Mexican Federal Telecommunications Institute (IFT) for the previously announced proposed combination of KCS and CP.  

Keith Creel, CP President and CEO, said: “This important milestone marks the next step on our path to creating the first single-line rail network linking the U.S., Mexico, and Canada. This historic combination will add capacity to the U.S. rail network, create new competitive transportation options, support North American economic growth, and deliver important benefits to customers, employees, and the environment.”

Patrick J. Ottensmeyer, President and CEO of KCS, said: “We are very excited to be working with CP to bring the benefits of this end-to-end combination to fruition. Together we will unlock the full potential of our networks to provide new single-line offerings and industry-best service that will dramatically expand competitive transportation options across North America.”

The transaction remains subject to satisfaction of customary closing conditions, including approval from stockholders of both companies. CP’s and KCS’ stockholders are scheduled to vote on the proposed transaction on 8 to 10 December 2021, respectively. Provided the transaction is approved by CP and KCS stockholders, it is expected to close two business days later on 14 December 2021.

On 30 September 2021, the Surface Transportation Board (STB) confirmed that it approved the use of a voting trust for the CP-KCS combination. In August 2021, the STB reaffirmed that the pre-2001 rules would govern its review of the CP-KCS transaction. In April 2021, the STB determined it would review the CP-KCS combination under the merger rules in existence prior to 2001 and the waiver granted to KCS in 2001 to exempt it from the 2001 merger rules. CP’s ultimate acquisition of control of KCS’ U.S. railways is subject to the approval of the STB.

The STB review of CP‘s proposed control of KCS is expected to be completed in the fourth quarter of 2022.